Decommissioning – achieving the best-value outcomes from inherently complex projects

RVA’s Managing Director Richard Vann and Group Engineering & Compliance Manager Matthew Waller, were interviewed by industry journal Tanks & Terminals last month. With change continuing apace in the global hydrocarbon engineering sector, the magazine was keen to hear how operators should tackle the decommissioning of their redundant, unsafe or commercially unviable facilities. Drawing on 50 years’ combined experience, Richard and Matthew offered their expert advice which resulted in a multi-page article in the publication. If you missed the write up you can read it in full, here…

Very few processing sectors have been immune from the difficult economic conditions of the past ten years, and the oil, gas and petrochemical world is no exception.

Over the last 10 years, the number of refineries closing in Europe alone has increased phenomenally, as oil prices have plummeted and market demand has shifted towards alternative forms of energy. We need only look at a recent UK Government announcement – which pledged that the sale of diesel and petrol cars and vans will be banned from 2040 – to see the latest in a wave of pressures confronting this industry.

In the face of such a tough trading environment, many hydrocarbon processing facilities simply become uneconomical to run. For example, the UK has seen the closure of the Coryton refinery in Essex, the Murco refinery in Milford Haven and Petroplus’ plant in Teesside, to name just a few. There have been offshore announcements too, with Shell’s recent divestment of a number of North Sea assets.

There are other factors at play of course, with many terminals simultaneously reaching the end of their natural design life, for instance. However, because regulatory frameworks dictate more frequent inspections and maintenance regimes at this point in their chronology, again, the driver for change is usually the need to exit an exponentially cost-prohibitive scenario. EHS (environmental, health and safety) concerns also naturally become apparent as these plants deteriorate in condition and operators become increasingly mindful of their corporate and social responsibilities.

An extended skill-set

The consequential challenge is to identify the most appropriate next-step action for these facilities, once they have been mothballed, rationalised or permanently closed down. Decommissioning should not be viewed merely as an extension of normal operations or the reverse of commissioning and construction, nor should it be rushed to achieve an accelerated exit. Instead, significant preparatory care must be exhibited to undertake these inherently hazardous assignments safely, with minimal environmental impact and ensuring the right solution for the business.

Acknowledging that decommissioning represents a great step into the unknown for most organisations, specialist external guidance is usually required. Of course, this expertise encounters a cost and when money is tight some companies are tempted to take shortcuts. But economic pressures do not mean that risks are any less onerous or that legislation can be flaunted. Armed with this experienced independent skill-set, on the other hand, operators can instead make safe, environmentally sound and commercially robust decisions about their site. The injection of this value-adding knowledge should therefore be seen as a team-strengthening exercise, rather than a loss of control.

Assessing all options

One of the first activities typically undertaken on a project of this nature, is the preparation of a feasibility and options study. Often commencing with a series of management workshops, these exploratory sessions help to uncover the key issues associated with a plant, project and site before providing a clear view of the true opportunity or liability of the decommissioning scheme. Drawing on the independent input of experts with a professional ‘demolition mindset’, this study naturally unveils a number of technical, costed conclusions and recommendations as to the most appropriate route maps for the site.

The project modelling exercise will also incorporate wider considerations such as HR planning, should the skill-sets of key personnel need to be retained for the project; market data which may influence the potential to dismantle some equipment for resale, thus maximising the monetisation of the assets; and stakeholder relations to safeguard the integrity of the longer-term assignment.

These various route maps can then be developed in further detail through optioneering exercises. At this stage, it is also important to assess how the different undertakings may be tackled moving forwards. There are some organisations that believe they can assume full coordination of the unfolding schedule themselves, whereas, in other instances, the external specialist shares management responsibility for all remaining works. In truth, a collaborative project integrating the knowledge of the client’s own personnel and extensively-trained decommissioning professionals, usually makes for the best-equipped team.

Defining the shape of the exercise

Sometimes the preferable route is to dismantle elements of a plant for scrap whilst mothballing remaining structures and/or keeping wider zones of the site operational such as a storage and distribution facility. In other scenarios, complete site clearance provides the safest and optimal financial solution, if direct liabilities such as hazardous material containment, leases/rates, security and maintenance costs can be removed. It all depends on the best fit option for the business – there is no such thing as a ‘one size fits all’ approach.

Regardless of the selected project model, everything must be rigorously documented, with detailed specifications of work created for the preparatory decommissioning exercise, as well as any hazardous material surveys, demolition contractor tenders and so on. A suitably skilled project team should also be assembled and the time-specific programme of works drawn up. This is a very different process to preparing a plant for an overhaul.

Environmental and personal protection

In priming a site – or even individual elements of a plant – for dismantling and/or demolition, there are two principal factors to consider.

Firstly, the strategy must ensure environmental protection, both in respect of prevention of emissions/loss of containment and waste management. A detailed understanding of potential site-specific hazards is therefore required, as is a comprehension of the waste regulations that govern these materials. This will help to determine the most appropriate decommissioning and handling methodologies, in line with the waste hierarchy.

In the UK, for example, it is commonplace for 99% of metals to be salvaged and sent for recycling, either direct to a smelter or via a scrap merchant. However, the metals must firstly be decontaminated to a level that will, as a minimum, meet regulatory requirements and also prevent hazardous materials, such as hydrocarbons, intermediates and final product from entering the recyclable waste chain. The objective is not to overly clean materials so that they are completely contaminant-free, but take them to a ‘known state’ that the waste route can handle. Striking the right balance at this point could have a significant impact on both EHS and financial outcome of the overall project. A coherent environmental management plan should therefore be compiled, to ensure both legislative and CSR compliance.

Such deliberations should be made in parallel to the second primary consideration – the personal protection of people. It is imperative that any on-site processes and procedures are also assessed in terms of their ability to keep operators safe. In other words, all potential decontamination methodologies must be considered to arrive at the best-fit solution with minimal risk to the people carrying out the tasks.

The technical impact of business decisions and non-decisions

Anyone involved in a decommissioning assignment must remember that the project exists to provide value – of some kind – to the oil, gas or petrochemical business. The technical intricacies of each commercial decision – or non-decision – must therefore be evaluated and planned for.

The operator may wish to delay some elements of decision making, should the sale of parts of the plant/site be under exploration, for instance. In this example, the project therefore needs to respect this requirement for flexibility. Detailed isolation strategies should be prepared to reflect this, with costed plans b), c) and d) also ‘on the shelf’ along with key dates by which decisions should be made. This allows the operator the ability to delay their overall decision making, if required, whilst being fully aware of the commercial or programme-centric consequence.

There will also be some demolition-specific hazards that are better dealt with during this early preparatory phase. Stored energy, for example, presents a significant hazard, therefore it must be identified as soon as possible, regardless of when the actual controlled release itself will be carried out. Items such as cold pull in steam mains, large ‘slam shut’ valves, accumulators or counterweights can often be overlooked by decommissioning teams and then not recognised or understood by the demolition team that undertakes the subsequent on-site works. Whatever works are – or are not – carried out at different phases in the programme, it is essential that a robust system is developed to document everything. This must be communicated in a universal ‘language’ that translates across both petrochemical and process engineering, into the mechanical, civil, structural and demolition engineering professions. Nothing can be open to interpretation only.

Project spotlight – bitumen refinery, Western Europe

In mid-2016, the owners of a part-redundant bitumen refinery in Western Europe, approached RVA to explore the safest, most cost-effective and environmentally sound project model for their 36-hectare site.

Whilst a tank farm was still in temporary use for material storage, the client sought a feasibility and options study that would uncover the potential route maps for the wider plant. They wanted to explore whether it was possible to sell part of the refinery to a third party, but needed to understand the decontamination, dismantling and demolition costs and methodologies associated with the varied assignment alternatives.

RVA therefore conducted this study, as well as the ensuing preparation of a phased site isolation and decontamination strategy. This was particularly valuable given the number of highly toxic and combustible products present, not to mention the early departure of personnel who had already been made redundant.

The strategy was compiled on a system-by-system basis complete with time parameters, plus a number of ‘plan B’ scenarios. Although these alternative critical paths would prove slightly more expensive, they did allow for the potential sale of the plant at multiple points in time, should a buyer be secured.

Time was of the essence on this project, as the site lease was posing a significant financial burden that the client wished to curtail. It was also crucial to harness the knowledge of all remaining staff before they too left for new employment elsewhere. Empowered by the flexibility of the different options, the client therefore decided to go to tender. RVA managed the demolition contractor pre-selection process, with a strong emphasis on the EHS standards and capabilities of potential suppliers.

The client has since begun the commodity decommissioning of the site, with specialist RVA guidance supplied for more complex elements of the plant. Shell and tube heat exchangers contained pyrophoric materials that required careful decontamination, for example, and extra-detailed decontamination plans were also required for the site’s distillation columns, given their housing of heavy hydrocarbon deposits.

RVA concluded the provision of support by certifying that the plant had been decommissioned to a ‘hazard free’ ‘known standard’, to assist the owner in complying with their regulatory requirements.

Out with the old…

It must be noted that decommissioning assignments do not always signify the end of a refinery’s story – they often pave the way for more forward-looking schemes of work too. SABIC is currently undergoing a multi-million-pound clean-up of two of its sites in the North East of England, for example, signalling the latest chapter in the creation of safe, efficient and state-of-the-art facilities that are fit for the future.

And such positive project scenarios are not a new phenomenon. Almost ten years ago, RVA was called out to the desert of Turkmenbashi, for instance, to provide specialist assistance on a demolition assignment that would enable the commissioning of a new Delayed Coker Unit (DCU).

But first there was the site of a 10-hectare refinery to clear. EPC contractor Lotus Enerji had committed to a three-month schedule during which time a number of structures had to be taken down, including three distillation columns up to 50m tall, three reinforced concrete storage silos weighing 2,000 tonnes, a 1,300-tonne reaction structure with four coke drums sitting on a 1,000-tonne reinforced concrete bed, and a 62m tall flue stack.

The complexity of these structures plus the absence of modern demolition machinery meant that the project posed too large a challenge for Lotus to manage single-handedly. RVA therefore rectified the programme’s sequencing issues, delivered a much-needed insight into state-of-the-art demolition techniques and practices, imparted health and safety, and project managed the scheme of works thereafter. This was certainly a very different undertaking, in an environment with highly contrasting standards, but the programme came to a safe, efficient and timely conclusion due to the input of specialist demolition expertise.

What does the future hold?

Does this decommissioning trend look set to continue within the hydrocarbon processing industry? Unfortunately, it seems inevitable as the commodity market fluctuates on a minute-by-minute basis and demands change on a global level.

Operators must therefore approach such assignments with caution. It can actually be a far less onerous task to prepare an oil, gas or petrochemical facility for decommissioning, than it is to operate it throughout its lifecycle – so long as the company has adequately planned for the situation and assembled the best team for the job.

If you would like to speak to RVA about the contents of this article, or you’re interested in decommissioning advice for your own project, please contact us via our website or call 020 8387 1323.